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Envirosell’s Underhill on Retailing Issues

During a lively presentation in which he raised just as many questions as he answered, Envirosell's Paco Underhill explored problems in beauty retail.

As founding president of Envirosell, Paco Underhill comes face-to-face on a daily basis with some of beauty and retail’s basic failures. During a lively presentation in which he posed as many questions as he answered, Underhill tackled some of the most challenging.

Education — or the lack thereof — was a key theme. “How do we overcome the nonbuy?” he asked. “One of the fundamental issues [beauty] has is ignoring the obvious.” As examples, he cited mass market skin care. “I don’t understand why, at my local Walgreens, Vaseline Intensive Care costs $2.49 and Olay costs $28 for what looks like the same amount. How do I articulate what those differences are?”

By the same token, he pointed to the disconnect between the online and in-store experience of many retailers. “A third of people who go into American stores are doing some form of research before they get to the store,” he said.

When it comes to converting new customers, he lauded a Japanese store called Three Minute Happiness, which primarily sells beauty samples for about 100 yen, or $1, each. “They’re targeting 13-, 14- and 15-year-old girls, who are at the start of their beauty-buying era,” Underhill said. “They aren’t forcing them to plunk down a significant amount of their allowance. They’re inviting them to engage and experiment. I think of this as starting the process, of going from novice to intermediate to deacon within the context of the larger beauty world.”

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Underhill continued with the metaphor as he revealed what he sees as the key to progress: To be evangelical. “It’s about believing in what you do, whether it’s the belief in laughter and poking fun at ourselves or whether it’s a health value or lifestyle brand,” he said. “But that evangelical nature is something that has to permeate everywhere.”

While he focused on big picture problems, Underhill also showed surveillance videos of shoppers that underscored everyday challenges, be it aisles that are too narrow (which he’s dubbed the butt brush factor), products that are difficult to reach, type that is too small to read, mirrors that are impossible to find.

Though many of these are universal problems, now more than ever, Underhill emphasized, retail success will depend on having a deep understanding of each local market where a store or brand does business. “Our ability to grow same-store sales is being able to respond on the ground to what is happening there,” he said. “How do I make my store more relevant in terms of its merchandising, its language, its product selection to the customers who are walking in the door.”

As an example, he cited Latino customers in Miami, who often like to shop as a family — making it incumbent upon a retailer to provide some sort of entertainment for the children. “At the point of sale, kids are either my allies or they’re my enemies,” he said to appreciative laughter.

Underhill concluded by noting the facts he believes in with “messianic fervor.” “Amenability and profitability are linked,” he said. “The degree to which I am committed to understanding what the needs of my customer are has a direct relationship to my bottom line.

“Second,” he continued, “is that giving good store or giving good section is looking at the interrelationship between the physical design, the information that is delivered at that physical point of sale and what the nature of the operating culture is. The easiest thing to change is the physical design, the toughest is the operating culture.”